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Supporting the New Forest Trust
Tax Benefits for Individuals
The Chancellor of the Exchequer, in this year's budget expressly stated that he was aiming to encourage more tax effective giving to charity.
Below are summarised the main relevant tax provisions:
Gift Aid
With effect from 6th April 2000, the minimum donation requirement of £250 has been abolished so that any gift, regular or one off, large or small, now qualifies for Gift Aid providing that a donor completes a Gift Aid Declaration. This Declaration can be completed by post and does not involve any complicated procedures. Once executed, the Declaration operates for all future donations to the Foundation by that individual if desired.
If the donor is a basic rate taxpayer, no further tax relief is due as on making the cash donation to the charity, the donor is treated as making the payment net of basic rate tax, currently 22%.
If the donor is a higher rate taxpayer, the additional tax relief may be claimed on the difference between tax at the higher rate and the basic rate {ie 18% (40% - 22%)}, in the annual Self Assessment tax return.
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EXAMPLE 1
A donor makes a payment under the Gift Aid Scheme of £780 to the New Forest Trust. (This sum is treated as a gift made net of basic rate tax).
Individual
If the donor is a basic rate taxpayer, then no further tax relief is due.
If the donor is a higher rate taxpayer, then tax at the higher rate less the basic rate, may be claimed on the grossed up equivalent of the payment:
£780 x 100/78 x 18% = £180
New Forest Trust
The New Forest Trust receives £780 from the donor and can reclaim the basic rate of income tax from the Inland Revenue.
£780 x 22/78 = £220
When this is added to the gift, the New Forest Trust receives:
£780 + £220 = £1,000
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EXAMPLE 2
A gift of £250 would cost a higher rate tax payer £192.31 and result in a total gift of £320.51
Individual — higher rate tax payer
£250 x 100/78 x 18% = £192.31
New Forest Trust
£250 x 22/78 = £320.51
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Declaration
The amount of information required on a Gift Aid declaration is to be kept to a minimum but must include:
- The donor's name The donor's address The charity's name A description of the donations to which the declaration relates
- A declaration that the donations are to be treated as Gift Aid donations
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